Correlation Between Lebenthal Lisanti and Auer Growth

Can any of the company-specific risk be diversified away by investing in both Lebenthal Lisanti and Auer Growth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lebenthal Lisanti and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lebenthal Lisanti Small and Auer Growth Fund, you can compare the effects of market volatilities on Lebenthal Lisanti and Auer Growth and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lebenthal Lisanti with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Auer Growth.

Diversification Opportunities for Lebenthal Lisanti and Auer Growth

0.6

Correlation Coefficient

Lebenthal Lisanti  Auer Growth

Poor diversification

The 3 months correlation between Lebenthal and Auer is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and Lebenthal Lisanti is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lebenthal Lisanti Small are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Auer Growth go up and down completely randomly.

Pair Corralation between Lebenthal Lisanti and Auer Growth

Assuming the 90 days horizon Lebenthal Lisanti Small is expected to generate 0.56 times more return on investment than Auer Growth. However, Lebenthal Lisanti Small is 1.78 times less risky than Auer Growth. It trades about -0.18 of its potential returns per unit of risk. Auer Growth Fund is currently generating about -0.17 per unit of risk. If you would invest  2,245  in Lebenthal Lisanti Small on November 29, 2024 and sell it today you would lose (344.00) from holding Lebenthal Lisanti Small or give up 15.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lebenthal Lisanti Small  vs.  Auer Growth Fund

Lebenthal Lisanti Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lebenthal Lisanti Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Auer Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auer Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Lebenthal Lisanti and Auer Growth

The main advantage of trading using opposite Lebenthal Lisanti and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lebenthal Lisanti position performs unexpectedly, Auer Growth can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Auer Growth will offset losses from the drop in Auer Growth's long position.

The idea behind Lebenthal Lisanti Small and Auer Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.